This subproject is one of many research subprojects utilizing the resources provided by a Center grant funded by NIH/NCRR. The subproject and investigator (PI) may have received primary funding from another NIH source, and thus could be represented in other CRISP entries. The institution listed is for the Center, which is not necessarily the institution for the investigator. Declarative memory formation is known to be influenced both by interference from competing memories as well as motivational factors such as the anticipation of reward. While interference has a deleterious effect on episodic encoding and frequently elicits activation in left ventrolateral prefrontal cortex (VLPFC), reward anticipation has recently been shown to facilitate encoding through engagement of mesolimbic structures. Although reward anticipation and the presence of interference have distinct effects, the extent of interactions between the neural systems engaged by each remains unclear. In the present study, we used functional MRI to characterize neural responses related to reward anticipation and mnemonic interference in the context of a paired associate memory task. During scanning, each paired associate encoding trial was preceded by a cue indicating the potential reward if the pair could be later remembered (either 'high'or 'low'reward trials). Moreover, while some pairs were entirely novel, others contained elements previously associated with other stimuli (no interference vs. interference trials, respectively).